You’d be forgiven for thinking that the pound has been caught up in the wave of Britishness ahead of the King’s Coronation this weekend. But instead the rise to a 12-month high of $1.26 has been driven by the relative fall in UK wholesale gas prices, the relative stability of the UK’s banking sector and the relative rise in UK interest rate expectations. Even so, we suspect recessions in the US, the UK and the euro-zone this year will prompt a surge in demand for the safter dollar and mean the pound temporarily falls back to around $1.12 by the end of the year.
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